Cyber-related losses are expected to increase across all business lines over the next 12 months while silent cyber continues to pose a massive threat, according to an industry-wide survey conducted by insurance and reinsurance broker Willis Towers Watson (WTW).
“The insurance market considers ‘silent cyber’ to be a far greater risk than ever before,” stated Anthony Dagostino, Global Head of Cyber Risk Solutions, WTW.
Silent cyber can occur when other types of insurance or reinsurance policies fail to explicitly exclude cyber risks, which could result in an accumulation of cyber losses within other policies.
The increasing frequency of cyber-attacks and resulting threat to utility infrastructure led to the IT/Utilities/Telecom industry group reporting the highest perceived property silent cyber risk factor, with 42% of respondents reporting they are likely to incur ten or more cyber related loss for every hundred non-cyber covered losses.
Furthermore, large cyber-attacks like WannaCry or NotPetya are expected to become more frequent, with 60% of the 700 respondents stating they anticipate these occurring at least once every five years.
“The 2017 WannaCry and NotPetya attacks highlighted this risk and potential damage across all business areas – causing significant concern around silent cyber,” said Dagostino.
“This increased risk perception has highlighted the need for specific cyber coverage, but competitive market conditions are limiting the scope for coverage or pricing adjustments to be made in other lines of business.”
The survey reveals that over 60% of respondents estimate it is likely to incur more than one cyber related loss for every hundred non-cyber covered losses over the next 12 months, in all lines of business apart from workers compensation, compared to less than 50% in any line of business in 2017.
Mark Synnott, Global Cyber Leader, Willis Re, added, “Willis Re is at the forefront of helping clients assess aggregation risk to silent cyber exposure through our annual silent cyber survey, which we have built into our portfolio analytics.
“We also have a market-tested reinsurance solution to mitigate this risk – CAStL, a cyber aggregate stop loss that covers all forms of affirmative and silent cyber exposure.”